Mayor Schmidt Delivers State of the City Address

February 18, 2014 11:18 AM

This is my fifth State of the City Address. In my previous four Addresses, I sounded the alarm regarding the perilous condition of the City’s finances. In the past year, we continued to make steady progress toward repairing the damage done in prior years, and although many challenges remain, the City is better positioned to meet those challenges and to thrive in the coming year.

As I was preparing this Address, I was trying to think of a single word or phrase which would describe the current state of the City. However, there are so many things happening and so many hurdles which we still face, it is impossible to do so. I can say without reservation that it is a great time to be living in Park Ridge. Economic development is strong, we have become a model for transparent taxpayer-oriented government, and the City is enjoying a cultural arts renaissance of sorts and ever-increasing interest in the history of Park Ridge, a history which reflects how unique and blessed we are to be living here.

The financial condition of Park Ridge continues to improve as it has for several years. After many years of multi-million dollar deficits, the City Council is on the verge of passing a budget which is forecast to result in the fifth consecutive surplus in the City’s General Fund, its operating fund. These surpluses have enabled the City to continue edging away from the fiscal precipice that had threatened to wipe out the General Fund. Now, the General Fund is in a better position to withstand the ever-present and significant burden brought on by the Uptown TIF debt.

According to the latest figures, the City generated a surplus of approximately $1,450,000 in the fiscal year ending April 30, 2013. The latest projections show that the General Fund will generate another $510,000 surplus in the current fiscal year which ends on April 30, 2014. And the good news continues. The City Council is currently working on the budget for the next fiscal year beginning May 1, 2014 which, as of now, would result in a projected surplus of $240,000 in the General Fund.

These surpluses in the General Fund are critical to the City’s long-term financial health. Just four years ago, the City’s unrestricted General Fund balance stood at a dangerously low $2.6 million, barely one-third of the figure it should be according to generally-accepted municipal standards. Happily, if projections by the City’s staff are accurate, the General Fund balance will be almost $6.9 million by the end of the next fiscal year, within striking distance of the $7.6 million target fund balance which would allow the City to meet that minimum standard.

As I said last year, much of the credit for these successes goes to a combination of a vastly improved budget process, stricter controls over spending and increases in non-property tax revenues. The City’s improving retail sector continues to play an important role in those revenue increases. The City’s annual sales tax revenues increased from $4.3 million at the end of the 2010 fiscal year to an anticipated $6.5 million for the fiscal year which will end on April 30, 2014, an increase of almost 50% in just four years. And the latest estimate from the City’s staff is that sales tax revenues will increase to at least $6.9 million during the upcoming fiscal year.

The jump in retail sales tax revenues, along with the improved budget process and more discipline in spending, has allowed the City to continue to reduce its dependency on property tax levy increases. In December 2012, the City Council was able to reduce the increase in the City’s portion of the property tax levy to a mere 2.15%, the lowest increase in at least 10 years. This past December, the City Council kept the increase at a respectable 2.2%. Our goal should remain reducing or eliminating any increases altogether.

This has been a good year for economic development in Park Ridge. The new Whole Foods store opened last November to great fanfare, and tomorrow morning at 6 a.m., the new Mariano’s store will be open for business, much to the delight of its many fans. The decision of these two well-respected corporations to locate in Park Ridge is an encouraging sign and will hopefully prompt other businesses to consider Park Ridge as a good place to do business.

Other signs abound that the City is enjoying robust economic development. A number of housing redevelopment projects are in the works which will add to the City’s property tax base and provide our local retailers with hundreds of potential new customers, all of which will help ease the burden on individual property taxpayers. We recently learned that the City’s revenue from building permits this year will exceed the budgeted amount by a healthy margin, and property transfer fees have already exceeded the budget amount by almost 15%. And there are still three months left to go in the fiscal year. These are all very encouraging developments.

We must continue to do everything we can to make Park Ridge welcoming and inviting to existing and prospective businesses so that we can maintain the positive trend in retail sales tax revenues and further lessen our dependency on property taxes. For years, our Community Preservation and Development Department was widely criticized for being “business unfriendly.” Whether that criticism was fair is no longer an issue because of the marked improvement in the performance of that Department over the last couple years. I am very pleased with the feedback I have received from the business community including, most recently, representatives of Whole Foods and Mariano’s regarding the Department’s “can do” approach. And I appreciate the fact that the Department has set up a meeting with contractors to update them on the permit process and code changes and to give them an opportunity to meet the staff personnel who will be their point persons at City Hall.

The City will continue to work closely with the Chamber of Commerce and other local businesses to promote the local business community. And as I have done in every prior State of the City Address, I again urge the residents of Park Ridge to support local businesses and remember that every dime the City collects in sales tax revenue is one less dime it must levy in property taxes.

Unfortunately, the good economic news for the City is tempered by the realization that the Uptown TIF remains a financial albatross around our necks which will hamper us for years to come. The City has explored various options which might be available to alleviate the burden of the TIF. However, none of those options offers very meaningful relief, and even under a best-case scenario, the TIF is expected to annually drain $1 million or more from the General Fund for at least another decade. That is why it is so important to continue generating General Fund surpluses so the City has the resources to address the problem.

I want to turn my attention for a moment to the situation in Springfield. There should be no doubt in your minds that what happens in Springfield over the next few weeks and months will have a major impact on the City’s financial well-being and the financial well-being of its individual citizens. When I first took office as Mayor in 2009, our expenditure for fire and police pensions for the 2008-2009 fiscal year was $1.7 million. In the proposed budget for the upcoming fiscal year, we must devote $3.3 million to funding our pension obligations, double what it was just 5 years ago. The City has zero control over our pension obligations; they are mandated by Springfield. So only Springfield can bring us relief which would benefit the City and its taxpaying residents.

Due to the unfortunate process of gerrymandering and redistricting, the City has been carved up into many pieces and we are now represented in Park Ridge by a large number of state representatives and state senators. The residents and the voters of Park Ridge need to learn who their state legislators are and hold these gentlemen accountable for finding a way to give municipalities and, ultimately, the taxpayers relief from the absurd pension obligations which have been forced upon us over the past few decades by a runaway State Legislature.

And perhaps even more importantly, Park Ridge voters must hold their state legislators accountable on the state income tax issue. Like the pension issue, the state income tax issue affects not only the City’s bottom line, but obviously affects the bottom line of the taxpayers. It is quite simple: the better our retail sector does in Park Ridge, the less we must depend on property taxes. Having a robust and vibrant retail sector depends, in part, on having residents with disposable income to patronize local business. When the State Legislature substantially hiked the state income tax rate a few years ago, the state legislators who voted for that tax increase promised to us all that the increase was temporary and would expire at the end of this year. Any elected official who voted for that income tax increase and does not do everything in his power to make sure that this promise is kept should be held accountable in no uncertain terms the next time they are up for election. And all other candidates who hope to represent us in Springfield should publicly commit to doing everything in their power to make sure that the State Legislature keeps its promise to the citizens of Park Ridge and the rest of the State.

There is more. Some politicians are pushing the notion of a “fair” progressive income tax by way of a constitutional amendment. Fair to whom? The only people such a tax will be “fair” to will be the politicians in Springfield who are simply unable and unwilling to get their act together but are all too willing to foist the State’s fiscal problems on the increasingly-burdened taxpayers.

This is how “fair” the “fair tax” could end up being to the residents of Park Ridge. The Illinois Policy Institute estimates that any family earning more than $50,000 per year will pay more income tax under the “fair tax” plan than under the flat tax set for reinstatement in 2015. And the progressive income tax being touted as “fair” by some politicians could cost the average Park Ridge family a whopping additional $2,000 per year over and above the amount the state legislators promised we would pay once the “temporary” income tax increase expires as promised. Does that sound “fair” to you? If not, then how can it sound “fair” to the men representing you in Springfield?

Make no mistake about it, taking more money out of the pockets of local residents will affect local businesses. Worse yet, because of the impact the increased income tax would have on retail sales tax revenues, that means the City’s dependence on property tax could increase by a corresponding amount. In other words, the taxpayers would get a double whammy: higher income taxes and higher property taxes. Now is the time to tell Senator Kotowski, Senator Mulroe, Representative McAulliffe, Representative Moylan and the other elected officials who represent us in Springfield that they represent you, not party leaders or anyone else, and that the only fair income tax is the one that the State Legislature promised to us.

We face other challenges. The City continues to make progress in addressing its chronic flood control issues. Several completed projects have provided benefits to many residents, and the City has continued to bolster its sewer maintenance program and sewer re-lining program. The City Council is now grappling with the issue of what to do about a number of proposed major projects which would cost tens of millions of dollars. There is no question that there are parts of town where flooding remains a critical issue. And there is no question that the elected officials and members of the City’s staff desire to solve those problems and make life better for our residents. That desire is tempered by the inescapable fact that our resources are limited and that the taxpayers’ ability to absorb the cost of massive expenditures is limited as well. And it is an unfortunate fact that some problems simply do not lend themselves to easy or even not-so-easy solutions. The Council can and should consider cost-sharing proposals and also consider whether to allow the community as a whole to have a say in the scope of this undertaking through an advisory referendum. The debate will be spirited, and I encourage the residents to be a part of it.

The O’Hare expansion continues to be a vexing problem for some residents. Our efforts to convince the Federal Aviation Administration and the City of Chicago to reevaluate the noise contour map and conduct a Supplemental Environmental Impact Study have fallen on deaf ears. Although we have received some support from our Congressman, that support has not been enough to alter the course of events. The “good” news, at least for Park Ridge residents, is that the newest runway which opened fairly recently has had a negative impact on thousands of residents living in the City of Chicago. As a result, those residents are beginning to organize in opposition to how the new runways are being utilized. It appears, for now at least, that the interests of those residents and Park Ridge residents are aligned.

I want to express my appreciation to the members of our O’Hare Airport Commission who continue to perform the difficult task of exploring ways to alleviate the effects of the expansion without resorting to litigation. I welcome the cooperation between our Commission and those grass roots organizations in Chicago. I am also heartened by the fact that other affected communities, such as Norridge and Harwood Heights, are beginning to raise their voices alongside ours and are beginning to get the attention of other federal elected officials. There is strength in numbers. I will reiterate, however, that I am opposed to wasting any more taxpayer funds seeking a legal solution to this dilemma. Any solution can and must be political in nature.

Meanwhile, there are other positive developments in the City which deserve recognition. Very recently, the City was again named as one of the 100 safest cities in the country. In fact, out of 1400 cities with a population of 25,000 or more, Park Ridge ranked an astounding 75th. This exceptional ranking can be attributed to our hardworking police officers, the many citizen volunteers who assist them in their duties, including especially the Citizens and Parent Patrols, and to the residents of the community who are vigilant in watching out for each other. These results continue to be a tangible reflection that Park Ridge truly is a great and safe place to live and raise a family.

Other signs abound that Park Ridge remains a desirable and vibrant community. As I said before, the City is enjoying a renaissance of sorts in cultural arts and a renewed appreciation of its history. The Park Ridge Civic Orchestra has been playing to sold out audiences in the magnificently-restored Pickwick Theater. The ever-popular concerts in the park continue to draw thousands of people to an expanded season. The Historical Society is set to move into its location on the old Youth Campus which will help spread knowledge regarding the City’s rich history and make it available to all. The Kalo Foundation’s Iannelli Heritage Center continues to offer arts and education programs to the community and has been accumulating important works of art which are steeped in the City’s history. The Historic Preservation Commission has continued its work of recognizing important historical buildings in town, and now there are nine properties which have received landmark status since the Commission began its work. Lutheran General continues to receive multiple awards and honors reflecting that it is one of the finest hospitals in America. Local service clubs and volunteer organizations continue to thrive, and on any given weekend during the summer, it is easy to find many fun activities around town which draw young and old alike. And of course, there is the Taste of Park Ridge which seems to get bigger and better every year. All of this is a reflection of the generosity of our residents and the strength of the City’s spirit of volunteerism. We are blessed to be living in such a place which has such a strong sense of community.

My thanks go out to all of the people here tonight and those who are or will be watching the Address on television or the City’s website. Have a good evening.